With The signing of a peace agreement, the country will engage in projects in large areas of the country where violence had hampered. Also the not needed a big budget to military spending that money could be used to develop projects

Jul 30, 2016 8:15 AM

Ricardo Camargo

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Hi, George, I think this depend on what kind of policies will be established and followed up by Colombian state (not government, I make clear about this) on different project portfolios that will (and should) appear on post-confict. Nowadays, there are some vague ideas about it, but nothing clear.

With The signing of a peace agreement, the country will engage in projects in large areas of the country where violence had hampered. Also the not needed a big budget to military spending that money could be used to develop projects

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1 reply by George Lewis

Jul 14, 2016 4:38 PM

George Lewis

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Javier - That's great news.... This will benefit Colombia as whole and Project Managers in South, Central and Northamerica.

The most projects and project managment demand is better for everyone.

Maybe some social projects, and projects in the conflict areas can be executed with more security and the country will experiment a huge growth in many areas where now is not easy because the violence.Saving Changes...

I am very excited because I expect that the peace treaty will boost the start of many infrastructure projects that have been long delayed and have hurt the country so much in its competitiveness. It will be like a waterfall, as following the infrastructure projects, private investment projects will start to boost Colombia´s economy. I also agree with Stéphane: risk and costs will be greatly reduced, not only because investments in security will drop (in some places in Colombia, private companies should contract security from the armed forces and make heavy investments in security) but also because infrastructure (roads mainly, and I hope, trains will be back) will reduce project costs. Infrastructure is very important because Colombia is a heavily centralized country, so transportation costs of goods from sea ports to production centres add so much to the final price of resources.

The peace treaty is dealing with just one (the most famous, and perhaps biggest and oldest) of the armed groups in Colombia. Many others are not participating. So, on the contrary of some colleagues here, I don't expect expenses with risk mitigation to fall significantly, at least not in the short term. Besides, there is a lot of infrastructure to be installed in order to attract further economic development, and that infrastructure shall be at the government's expense. PPPs will hardly be the solution, once there is no guaranteed volume of users to pay back a private investment. Considering that Colombia's economic situation is challenged by the fall in oil and commodities prices and by the depletion of its gas reserves, I don't think there will be money for funding the infrastructure. So I project management activities will not be greatly impacted.

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1 reply by George Lewis

Jul 14, 2016 4:42 PM

George Lewis

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Fabio - I'm interested in your comments.

(1) Can you expand why you think there will be no budget for funding infrastructure projects that will benefit PMs?

(2) Are they other groups that are still active? I thought this peace treaty was for all groups. Can you expand?

With The signing of a peace agreement, the country will engage in projects in large areas of the country where violence had hampered. Also the not needed a big budget to military spending that money could be used to develop projects

Javier - That's great news.... This will benefit Colombia as whole and Project Managers in South, Central and Northamerica.

The most projects and project managment demand is better for everyone.

The peace treaty is dealing with just one (the most famous, and perhaps biggest and oldest) of the armed groups in Colombia. Many others are not participating. So, on the contrary of some colleagues here, I don't expect expenses with risk mitigation to fall significantly, at least not in the short term. Besides, there is a lot of infrastructure to be installed in order to attract further economic development, and that infrastructure shall be at the government's expense. PPPs will hardly be the solution, once there is no guaranteed volume of users to pay back a private investment. Considering that Colombia's economic situation is challenged by the fall in oil and commodities prices and by the depletion of its gas reserves, I don't think there will be money for funding the infrastructure. So I project management activities will not be greatly impacted.

Fabio - I'm interested in your comments.

(1) Can you expand why you think there will be no budget for funding infrastructure projects that will benefit PMs?

(2) Are they other groups that are still active? I thought this peace treaty was for all groups. Can you expand?

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1 reply by Fabio Teixeira de Melo

Jul 14, 2016 5:38 PM

Fabio Teixeira de Melo

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George, let me expand:

1) Why I don't see any budget:

1a) The fall in the oil prices has reduced the fiscal income, with an impact greater than 2% of the GDP. The government financial deficit is around 8% of the GDP. They are planning to propose an increase in taxes to try and balance their accounts. I don't believe the new taxes will generate a short-term budget surplus that might fund new infrastructure projects.

1b) Taking foreign debt is a tough option, when the exchange rate COP/USD raised from 1900 to 3000 in less than two years.

1c) In the end of 2015 the government has launched an initiative for new toll roads under a PPP model, called 4G. Those are roads with heavy traffic, so one would expect they would be highly bankable projects. As far as I know, very few of those have achieved financial closure. It means there is a shortage of credit for this kind of projects in the national banking sector.

2) Apart of FARC, there are other two major similar groups: EPL (I am not sure if they are in the peace treaty or not) and ELN (not in the treaty). Then there are paramilitary groups, which are right-wing and were created to combat the FARC. Then there are the BACRIM ("bandas criminals"), which are organized criminal groups that grew in areas where the State was absent due to the FARC. Then there are illegal drug producers, who may or may not be linked to the other groups. It's a complicate web, and they all operate in the area where those infrastructure projects would be developed.

The peace treaty is great news and an excellent first step. The projects will surely come. I just don't think they will unfold in the short term and in ideal conditions.